New operators advised to start small and plan big

While the barriers to entry are high for new and emerging road transport operators, there are opportunities. “But proceed with caution,” advises Road Freight Association (RFA) technical and operations manager Gavin Kelly, pointing to risks associated with financing a new transport business. “Before starting their businesses, operators have to do their homework and identify where the gaps are in the marketplace. Is it last mile deliveries, is it crossborder or just starting with a provincial or regional footprint?” Kelly says the financing institutions will also expect applicants to be very clear about their goals and objectives with the business. “Sometimes guys will go bigger based on their growth projections but until that projection translates into hard cash, anything can happen to scupper that ambitious target,” he explains. According to Kelly it is often better for operators to invest in smaller commercial vehicles and build up to bigger as the demand increases and stabilises. “Yes the price per kilometer will be higher but the financing risk is lower,” he says, pointing out that the RFA provides assistance to new transport entrants through workshops and as part of the association’s Small Medium and Micro Enterprise (SMME) Toolkit which, amongst others, provides guidance on how to apply for financing and to create a sustainable operation.